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#309 Small Things Matter: The Convergence of Equity and Philanthro-ethics

May 22nd, 2018

Richard Marker

The philanthropy field has not been exempt from ethical lapses – some at a headline grabbing level. And these scandals have been seen on both sides of the table: funders and leaders of non-profits have been caught in all too embarrassing behaviors. In many of these cases, the violators were receiving very generous pay packages – greed may have been a driver, but need was not. Many have asked me: how did such a thing happen?

Over my own career, I have supervised hundreds of individuals, overseen dozens of organizations, and been on the board of or funded many others. Sad to say, I have seen, and had to act on, too many instances of theft, abuse, and other ethical lapses. In each case, people have asked me: how did this happen?

My response is the same to both inquiries: in every case of which I am aware, the violations began as very small over-reaches. Penny-ante stuff. Nothing that added up to much, “what is the big deal if I use petty cash for private purposes or receive a small ‘gift’ in exchange for a legitimate contract we would sign anyway?”

What I saw in every case of which I had direct knowledge and seems to have been true in the big picture ones as well, is that the violations began small. Then, incrementally grew. Before they knew it, they became so normal that they stopped thinking about it. After all, no one said anything, so maybe no one cared.

By the time the violators were exposed, the violations added up – to real money, to real embarrassment to all, and to real challenge to the confidence in the ability of our sector or out boards to self-monitor. [Now, before anyone retorts with a “what about… the banking industry or the person who currently occupies the president’s seat or Enron or Weinstein or….” let me say unequivocally that this is not a competition to the bottom. I function in the philanthropy sector, write and speak about philanthro-ethics, and care deeply about the good we can do. So, this is what I feel is appropriate for me to address.

I was reminded of this early this morning: leaving the gym, I happened upon a phone charger on the ground. It was in a public place and was a high-quality model compatible with my own phone. I picked it up, put it in my pocket, and had an internal debate about what to do. There was no way to trace it – it wasn’t the phone, only the charger. People lose these things all the time. At the same time, it certainly wasn’t mine even though I found it in a public place.

I decided to return to where I found it, a few steps from an apartment building, to turn it in. The concierge and I agreed: if no one claimed it within 2 days, it would be legitimate to claim it. Probably a fair solution to an ethical dilemma.

This is not a great hero story. There have been many more noble things I [and most of us] have done. Indeed, I have written about some of these in the past. But it came at a time when we are, collectively, thinking a lot about equity. And it reminded me that, in life, in communities, in organizations, and in personal relationships, the true measure of our values is the collection of the little things.

Yes, it is true that we have real systemic challenges that require big thinking. The environment, public discourse, poverty, racism and xenophobia of all sorts – to mention just a few. These require big actions within our funding sector [see the most recent manual by NCRP for how we might begin to do so], in our advocacy for transformative change in our public policy toward more just and equitable allocation of resources, toward enabling those who have been penalized purely because of the color of their skin or their ethnic background, or their creed or their physical make-up to be treated as full and deserving members of society, to a radical embrace of our fragile environment.

These are all big, systemic, and urgent challenges that cannot and must not be deferred. At the same time, it is important to remember that we show how seriously we take these larger commitments as much by our daily small behaviors as by our ambitious aspirations. In fact, we have learned from social science studies that we are more likely to take the big matters seriously, and be less paralyzed by them, when we see that there are actions and practices we can take as individuals. If we behave properly in our daily interactions, we are more likely to be empathetic to the larger changes the world needs to make.

When our daily ethical behavior has eroded, so has the underlying belief that we are in this together. When we behave only in self-interest, we challenge the delicate fabric which binds us, the connections upon which all of us rely.

But when our inner compass of ethics pushes us toward making good and responsible and ethical and honest decisions daily, even if they are not by themselves heroic, we are much more likely to be heroic and courageous in our efforts to bring about the changes that we, and the world, require.

I sure hope so.

#308 Gratuitous Haggling- A Living Example of Power Imbalance

May 15th, 2018

Richard Marker

For several days, I have been trying to figure out why this incident bothered me so much.

Some out of town visitors wanted to be tourists for a few hours. Before doing so, they decided, wisely, that they needed protection from the harsh sun and stopped at a street vendor selling caps. They were committed to buying two, and spent some time deciding which “statement” they wanted their new caps to make.

Once they decided, they asked what the price was. The response “$10 each”. They replied, “can’t you give us a discount since we are buying two?” The street vendor hesitated, and then reluctantly agreed to reduce the price by $2. Our friends were very proud of themselves for a successful negotiation.

The episode has made me uncomfortable since then, and I finally understood why. It reflected a deep power imbalance that reminds me of a pattern too often played out between funders and grantees.

I have no clue about the financial situation of those working in that kiosk. It is fair to assume that no one sits out there all day in the rain or shine, heat or cold, if they have substantial financial reserves. Whatever they may charge per hat, I am sure they don’t make very much. Every sale matters.

I am also sure that our friends, wonderful and caring people, didn’t think anything about that when they haggled. The $2 made no difference to their financial well-being whatsoever. For them it was a bit of sport. And in this instance, a small victory made them momentarily happy. And, let me fair, one sees this all the time, and typically we don’t think much about it; our visitors were certainly no different than many others.

Nevertheless, I felt, why begrudge that street vendor the $2 that most probably meant much more to him?

In many parts of the world, that kind of haggling is de rigueur. The initial “ask” is set with the clear understanding that the “buy” will be lower. Both sides start from the same premise. [Ethicists affirm that even that kind of bargaining is unethical if you never have any intention of buying in the first place.] But that isn’t the way most people do things in the USA, and the financial power imbalance is reinforced every time someone with adequate resources tries to do so. One who lives by very limited incremental profit on each sale must weigh the chance of losing a sale altogether. In this example, the original price was not set based on selling to a haggler

I don’t want to make too much of this, but we do see this played out in small ways all the time: in taxis, in restaurants, in hotels… anyplace where workers are paid minimal wages and depend on the good will of patrons to help them along. There may be an occasional story of one of those workers getting rich, but the percentages are hugely against them.

We still see this, sad to say, in the ways many funders treat their grantees. Yes, things are improved and the field is getting much better at it than we were even a decade ago. But too many funders still assume that a grant amount is something to be bargained over, that there is a sense of victory if they can persuade a grantee to accept a lower amount, or have someone else pay for the infrastructure or even part of the project – Why? Just in principle.

All in all, that is bad practice for many reasons:

1. It reinforces the issue raised above – the endemic power imbalance between those who have and those who need.
2. It doesn’t address that the grantee actually needs a certain amount to do the work the funder wants accomplished. It puts the discussion about grant amounts in terms of deal making, not problem solving.
3. It creates an implicitly adversarial relationship between funder and grantee when they and we need it to be collaborative.
4. It leads to grantees feeling that they must oversell their potential success instead of sharing more iterative learning.
5. It assumes that the proper role for the nonprofit sector is to be treated like supplicants rather than professionals with requisite expertise to address social ills.

To be sure, every funder should feel comfortable that an amount being given is the right amount, not too much, sometimes – and, much more typically, not too little. Due diligence is perfectly appropriate. But once that is done, once a funder has decided that this grantee is worth the investment, the rest should be a matter of agreeing on realistic expectations and costs, authentic risk assessment, outcome measures, and more.

Haggling for the best deal shouldn’t be on this list.

#307 Philanthropy Advisor or Philanthropic Advisor

May 7th, 2018

Richard Marker

Quite frequently, when I speak at an investment related conference, I am asked about what a philanthropy advisor does, and how one chooses among us. Not so surprising that I am asked since, after all, philanthropy is why I am invited to speak. What is surprising is how many don’t realize that there are those of us with this expertise.

In choosing, there are many subjective factors, of course, such as compatibility, but there are also substantial differences in what one does, how one does it, and what the business models are. Periodically, it is useful to give some perspective to new readers, and remind older ones, to help you make appropriate choices.

Some of what I do professionally is to advise funders, philanthropists, families, and philanthropists in their philanthropy decision-making priorities and style. It is a growing field and can include those from a variety of other professions: wealth management, trust and estates, family systems, content expertise, family offices, non-profit management, and more, as well as those of us with extensive background in the philanthropy sector on the funder side. Since there are no barriers to entry, it is very much “caveat emptor” – let the buyer beware. Does the advisor know about and have experience in philanthropy, or about the finances of philanthropy, or about family issues, or about the fields that are a funder’s priorities?

Even among those of us with extensive and relevant professional background, there are a wide variety of business models: Some charge straight fees, some a percentage of assets or giving, some prefer retainer arrangements, some a smorgasbord of services – pay as you go. And more, I am sure. Each business model has its legitimacy, but it is important for any funder to fully understand what they are, how they compare, and ultimately, what is best for the funder. [To take our firm as one illustration: we only provide advisory services on strategy, evaluation, and inter-generation matters; we charge on a project-fee basis, determined by how long a project is estimated to take; and we do not accept any management or retainer contracts. Our model is perfect for funders who want an independent advisor who has no longer-term agenda beyond what we offer, but it is not very appropriate for someone looking for “full service,” or ongoing management of their philanthropy or a part time program officer or an impact investment guru.]

Having determined the relevant expertise, it is also useful to learn something about our methodologies. Most good advisors will probably get you where you need to be, but we may not all get you there the same way. We should be able to articulate why we do it the way we do and show you how our method can be implemented in your situation both during the “process” and after. Not so good advisors give you advice that gathers dust.

My final point is a bit of a nit-pick. Some use the term “philanthropic advisor” and others “philanthropy advisor.” I have a strong preference for the latter. After all, I would hope that any and all of us in this field, and many other fields, are philanthropic. We should all be philanthropic, generous with our time and money, as are many with totally unrelated expertise. But to be a “Philanthropy” Advisor should mean that we bring expertise, experience, and perspective to the services we provide.

Our field is responsible for granting and investing billions of dollars, sustaining an entire sector, influencing public policy, and visioning more equitable societies. I certainly hope we are philanthropic, but even more that we are experts in the humbling and even sacred work of philanthropy. Any client deserves no less.

#306 Pedestrian Friendly vs. Pedestrian Normal – A Metaphor for Equity Metrics

May 2nd, 2018

Richard Marker

Equity is the philanthropy word of the year. And last. And next.

And well it should be. After all, what are we about if we don’t have societal outcomes that redress systemic injustice, inequality, racism, anti-Semitism, xenophobia, age-ism, misogyny, nativism….? And to be sure, any of us who are philanthropoids know that it is a topic, or THE topic, at virtually every major philanthropy gathering. That doesn’t mean that answers are easy, that funding decisions are obvious, that evidence of solutions is persuasive, or that the destructive current political ethos will be responsive, but it does mean that we are consistent in naming our goals.

However, just because we insiders in the field think we know what we mean when we use the “equity” shorthand, I can attest that this is far from true among those just outside our convo zone, and even among partisans within.

Many of us have tried for years to distinguish between equality of access or process vs equity or equitability of results, but not everyone buys in. There are many who resist the idea of systemic and endemic injustice, and assume, just as justice is supposed to be blind, so should philanthropy. Or that educational standards should apply across the board, even if the resources and support systems don’t make those standards fair. Or that passing laws against discrimination guarantees that deeply engrained attitudes and behaviors will simply dissipate.

Fortunately, much of the philanthropy world has largely bought into the concept that outcomes and desired changes matter more than best intentions. It is incumbent on us, then, to find a way to explain to others what we mean. And, since public policy, behavior, and the public square depend on us getting this right, I have struggled with ways to communicate what we mean. How is this one as a metaphor? Pedestrian-Friendly vs. Pedestrian-Normal.

But first the background:

Many readers know that some short months ago, we relocated from the Upper East Side of Manhattan to Washington, DC. As folks fully committed to not owning a car, we were only willing to live in places where one wouldn’t be needed. And we do.

We live in downtown Bethesda, in an apartment building on a major street, 2 blocks from the Metro, easy walking distance from markets, restaurants, and most other accoutrements of urban living. There are sidewalks, traffic lights, crosswalks… the only thing missing are actual pedestrians.

Coming from New York, of course, we are used to pedestrians. Cars wait for us to cross at intersections, the sidewalks are bustling with us – everywhere. We couldn’t understand why we don’t see them in our new downtown.

It seems we have a case of a pedestrian -friendly area devoid of pedestrians. And since there are so few, cars are not as careful in turning, stopping at crosswalks, and otherwise knowing that intersections need to be shared. And when we called a couple of problematic intersections to the attention of the county, they responded that not enough pedestrians cross there to warrant a marked crosswalk!

Having a “pedestrian-friendly” community is a first step, a veritable indispensable input. But while the intention is to make things “pedestrian friendly”, it is not [yet?] “pedestrian-normal.” In other words, the actual outcome does not fulfill the goal. And thus, pedestrians are still needlessly at risk. Something about the system still needs to be addressed. [this is a metaphor, folks; I am not addressing all of America’s systemic car-centric dependency or other causes, or even solutions. Only trying to illustrate the difference between funding for a result and getting the result.] This is a case where the desired systemic change has not happened. When pedestrians become normal, cars will slow down, or stop, or otherwise exhibit different behaviors. Probably not until.

Sometimes the dilemma goes the other way: I have been sufficiently sensitized to speaking on all-male panels that I make it a point not to do so. Yet not long ago, I found myself in such a situation – but with a difference. This is an organization that rarely has a gender imbalance, and in the past, I have been the only male on some of their panels. Under the circumstances of their proven record, would it be right or appropriate to make a stand in this case? I consulted with others – women – who are also regulars and who would normally be outspoken, and they all encouraged me to speak since this organization’s record is beyond reproach. The result of the organization’s consistent demonstration of gender sensitivity meant that any single exception was neither a symbol nor a case. Where the desired change is internalized and normal, an exception is not an aberration, and does not require disruption.

In our world, the challenge has become greatest in convening or collaborating for system change. There are too many who espouse a “you’re with me or a’gin me.” There is no middle ground. That means that if I have a political stance, or even a preferred solution that you don’t fully endorse, I am not welcome. It can be political correctness run amok – ore more specifically, to an unproductive level.

The issue is real: we all know that true systemic change requires an understanding and appreciation of the interconnectedness of many things. And it also requires an appreciation of how that interconnectedness impacts others. But, since no one can do everything, fund everything, or endorse everything, if we happen to disagree on priorities or approaches, that need not be an absolute red-line that prohibits collaboration.

While readers are well aware of my personal political leanings, and perhaps our funding priorities, this is one area where, if there is fault, it is on all sides of the political divide.

Absolutism can be a stumbling block on the way to equity. If we need to communicate that equity is a measure of outcomes and impact, we also must communicate that the pursuit of equity need not be so rigid that it prevents us from achieving the very impact we desire.

I wish that we lived in a pedestrian-normal community. But we will still continue to walk even though it isn’t.

#305 – Lessons from the March – This Time We Must Not Rest Until…

April 2nd, 2018

Richard Marker

While this post is a personal reflection, it is implicitly a call to action by those of us in the philanthropy world as well. It joins the growing chorus of those who argue that our sector no longer has the luxury of reticence in the face of the most profound challenges to the institutions of democratic stability since the McCarthy era.

The year was 1967. A friend and I were sitting on a Broadway bus in New York City. Sitting in front of us, apparently each minding his own business, were a hirsute college student and an older man. [Now that a lot of years have gone by, I realize that I have no idea how “old” that older man was at the time.]

The bus came to a stop, the older person stood up to leave, but before doing so struck the younger one in his face with a fist. He then got off the bus and ran away. The young man was not seriously hurt, but he was shocked and surprised. All the rest of us on the bus could only surmise that the older gentleman was so threatened by this long-haired college student that he literally lashed out. [Thank goodness the destructive belief in the unrestrained and extreme interpretation of the 2nd amendment was still in the future. I shudder to think if this blind rage had been accompanied by a gun. A point to remember toward the end of this essay.]

By 1967, most of us who had not rushed off to careers on Wall Street looked very much as this young man did. Indeed, between 1965 and 1968, the preferred attire for most had switched from buttoned down to denim-ed up. On university campuses, and in most of the trans-Atlantic big cities, the confluence of the counter culture and political activism [two very different motivating dynamics that converged in time] meant that what was normal then was profoundly different than it had been a scant 5 years earlier.

This is not the place to rehearse all of the changes, some fleeting, others more lasting, of those years, but one thing is certain. By 1968, it didn’t take much courage to protest. I don’t want to diminish the killings at Jackson State and Kent State, nor the “occupying” police presence on many university campuses and at the Democratic National Convention in Chicago. But they were, it appeared to many, the last gasps of a political enterprise that resisted the changing rules, the challenge to the mandatory draft, the protests against a despised war, the legal and moral insistence of racial and gender equity, and the transforming personal mores.

It was a movement, or in retrospect, several interlocking movements, that were young-person led. Some in the political power structures tried to ignore or squelch things at the time, but changes prevailed, even if radical Change may not have.

Over the next decades, many of us rested on our activist laurels. I know I did. We assumed, wrongly it now appears, that while there were still significant skirmishes to be fought in the areas of women’s rights over their own bodies, or fairness in hiring and education of minorities, or the degradation of the environment – to take but three, the big battles of a society that could hold its elected officials and big business accountable for misconduct were won. And there were governmental entities in place that would enforce these principles.

I cannot speak for everyone else, but I know that I never changed my political leanings even as my attire became more bespoke, and my hair – well, let’s just say that is long gone. However, what I discovered on numerous occasions over the years was that very few knew that I had those views. There were even occasions when I would speak up or write something or attend an event that incurred surprised reactions by other attendees or readers. But on the whole, I let others, too few others, take the lead in these and other important battles.

I don’t want to impugn others, although I don’t think these behaviors were mine alone. Activism, even when safe, is never easy and requires great tolerance for failure and disappointment. And it requires a lot of time, and even more social risk. How ironic, I now realize, that my passivity was during the very time when I, in fact, did have leadership positions -some ascribed, others earned. I had the opportunities to influence others, to articulate larger visions, to be more politically active, but didn’t.

Activism became less and less appealing as the political ethos deteriorated into money and partisanship and ugly personal nastiness. In 1967, the risk was a fist in the face; in 2018, there are opponents trolling our sites and toting guns. Even when it is socially safe, it is not without real risk.

Voting or sending an occasional letter or making an even more occasional phone call to an elected official is not that hard or risky. But getting in the trenches requires a different level of commitment, and that wasn’t what I did.

And if it is true that I am not alone, we are all a bit guilty of negligence. We have tolerated, mostly by our silence, this abysmal state of affairs, the erosion of confidence in our democracy, and the willful self-indulgent atomized existence of far too many.

The Parkland kids shook me out of my facile passivity. Yes, I did participate in recent marches – to respond to climate change, for women, for immigrants, and more – but there was something different this time. It resonated with the dormant part of my activist soul. And challenged me and hopefully us.

It may well be that my own personal opportunities to influence others are largely over, but that doesn’t exempt me from raising my voice, being a visible advocate, and choosing involvements that demand a restoration of a commitment to ethics and justice as bedrock principles of empowerment.

We didn’t quite accomplish what we hoped to in our last youth-led movement, when I was still young-ish. Now that I am 2 generations older, it is time to follow the young once again. And this time, we cannot leave it to them alone to finish the hard part of the work.

They and we and the nation as a whole deserve no less.

#393 The Fall of the Berlin Wall: An anniversary a year too early; not a minute too soon

March 5th, 2018

Richard Marker

Recently the NY Times published an extended piece on what has happened in the years since November 1989 when the Berlin Wall fell. The Wall has now been gone for longer than it stood. It has been gone long enough for decidedly revisionist theoreticians to bemoan its loss, xenophobes to blame its loss for precipitating an influx of “foreigners”, for Europe to have gone through celebratory post-nationalism and reactionary tribalism. It was a metaphor for a world with clear binary choices made more complicated without it.

On a personal level, its fall marked a life-changing experience for me, one that shaped a good deal of my professional involvements and interests since. As some of you know, I was in Berlin that day. For a short while after that, I would, in an attempt at humor, take credit, but after it became clear that re-unification was more complex and nuanced than originally imagined, that made little sense and wasn’t very funny. [I had been a guest of the West German government for several weeks prior to that famous day and stayed on briefly afterwards. My presence was pure coincidence.]

The Fall of the Wall is remembered as a peaceful symbol of the end of the Cold War. Only days before, if one stood at the Reichstag and looked into the space between the walls, one saw a killing field. Few recall that tensions were very high in the days leading up to 9 November. All of the armies occupying Berlin were on full alert, we were warned to stay away from Checkpoint Charlie, and there was on overriding sense that something could happen any second. The history that must be told is the miracle that no solider on either side, in a moment of panic, lost his [yes, his] cool and started shooting. It could easily have happened.

The result, ultimately, would have been the same but it would have been remembered very differently. The Cold War didn’t end with a whimper exactly, but it certainly was not the Bang it might have been. Thankfully.

As I said, it changed me. It wasn’t that I had been parochial exactly, but I had never been very focused on international issues, the dynamics of the many diasporas of many peoples, and the implications of an implicit post-nationalism that characterized that era.

After that experience I invested heavily in recrafting my own career, developing programs with several governments, speaking in many other countries, and cultivating some modest expertise as a frequent observer of a rapidly changing world. [Initially, most of this focused on Europe but subsequently I have had the privilege of speaking and meeting on 5 Continents – Australia being the only remaining outlier.]

There are many things I learned during those years – most notably a very profound respect for how history shapes one’s worldview. Watching the Republikaner march in Munich, or observing how Jews in the evolving Europe would lie low even 2 full generations after the Holocaust – then celebrate that they are more than survivors only to witness a resurgence of vitriolic anti-Semitism, or how Germany’s view of a post-nationalist Europe resonated with so few outside of Germany, or how the Czech and Slovak republics could become Czechoslovakia for only one year, only to divide again, or Brexit, or how long submerged ethnic identities exploded – in both wonderful and terrible ways, or how difficult it has been, even to this day, for some countries to come to grips with their own uncomfortable pasts, and more, has been extraordinary… and instructive by providing perspectives on today.

Given the frightening challenges to democratic ideals in the USA, and also in many other countries, it is clear that too many forget or deny that history is filled with destructive mis-steps. The USA is not the first nation or people that celebrated its exceptionalism, only to become an also-ran in subsequent centuries. Unconscionable divides between the haves and the have-nots have led to outright revolutions and decades of instability. Pluralistic societies cannot take for granted that tolerance and integration will be foregone conclusions in the future. Isolationism, in the form of national “superiority”, becomes a cancer on the body politic.

The Berlin Wall, with all of its metaphor and symbol, represented a binary understanding of the world. When that facile and simplistic overlay was removed, we learned that the world had not anticipated how complicated it would be nor was it adequately equipped to deal with the tribulations and challenges that have followed. My hope is that history will look back at our currently tumultuous time and see it as the last gasps of failed visions of totalitarian and xenophobic aspirations. If there are any abiding lessons to be learned, it is that we cannot rely on “history” to make sure that we survive these times intact, and we certainly cannot count on the self-discipline of trigger happy leaders.

#302 What Wealth Advisors Should Learn from the Philanthropy World

February 26th, 2018

Richard Marker

If you are a wealth advisor [or relationship manager, or any of a myriad of other titles for managing other people’s investments], you have seen the studies. Year after year, they consistently show that your clients may be pleased with the investment service you give them, but, as a rule, they don’t believe you are up to speed with your philanthropy advising. Moreover, they consistently show a disconnect between your self-perceptions and those of your clients.

There are numerous explanations:

1. For many, the simple answer is that it isn’t your job. Your job is to maximize value in a trusted relationship with your client. You make them as much money as you can according to a predetermined risk factor and anticipated longevity. Your compensation is based on money under management. [we’ll return to this point in a moment.]

You have no objection to philanthropy as an objective, and indeed are delighted when wealthy clients establish foundations or trusts so you can provide investment services to those entities, a win-win solution. Thus, you gladly have a “philanthropy” conversation, but all too typically as an investment vehicle.

But ultimately philanthropy is not an investment vehicle but represents money out the door for social good. It isn’t what you are trained or paid to do so it doesn’t occupy a lot of planning time. You may discuss the idea of philanthropy, especially vis a vis taxes [see #2] but your expertise rarely extends to how to spend the money to accomplish a social good. Clients who want a constructive conversation on philanthropy are often disappointed because, for them, philanthropy is what good they might do with the money they have made, not how they invest it.

2. Many wealth advisors do discuss philanthropic vehicles, but all too often only as a tax reduction or avoidance strategy. Where your clients spend it isn’t your concern, but properly structured, philanthropy can certainly reduce the tax burden. Indeed, l have heard multiple wealth advisors brag how they can use philanthropy to get their clients’ taxes down to $0. [Long time readers know how I feel about that!]

Studies have consistently shown, though, that tax savings is not a primary motivator for being philanthropic or altruistic. Taxes and tax savings may influence the specifics of how one structures ones giving, but if one isn’t altruistic or generous, it won’t be any more – or less – satisfying than any other tax reduction vehicle. But those who do want to be altruistic ultimately have a different set of concerns and questions, and whether to set up a trust or a private foundation or a DAF or even an LLC may be real solutions, but only as long as they are solutions to the real questions a client wishes answered. Yes, the vehicles matter, but they satisfy clients only if they reflect the values they want conveyed through them.

Philanthropy is ultimately not about maximizing value but maximizing values. So, as many very well-intentioned wealth advisors and trust attorneys do, simply asking about philanthropic interests and presenting structural alternatives without a deep understanding how philanthropy works is not satisfying to a client.

3. The next challenge is a very legitimate legal and structural issue. You are required to define who is your client and have a legally defined trusted relationship with that client. Often, though, philanthropic planning is a multi-generational matter. Even if the client is the only one expressing interest to you, without understanding the functional dynamics of a family, a perfectly legal and efficient solution may be far from efficacious and even counterproductive down the road.

Don’t misunderstand. I am well aware that many of you do try hard to establish relationships with the others in a family, some very successfully. But even then, most members of the family know to whom you are ultimately responsible and can sense your primary loyalty. [After a lot of years in this business, I can report that there are many foundations and trusts that handcuff or disempower or even antagonize surviving family members because the founder’s attorney did what was legally required but strategically flawed.]

This structural dilemma matters because only a very few people of wealth ever look beyond their wealth advisor or estate attorney for philanthropy advice. As one who speaks frequently at conferences for family offices and wealth managers, I regularly find myself meeting those of wealth or their advisors who express surprise that there are those of us whose expertise is philanthropy per se, and not money managers who happen to specialize in managing philanthropic assets.

Which brings me to the two key takeaways of this piece:

4. What do philanthropy advisors do – and how wealth advisors can collaborate with them?

Philanthropy advisors help their clients [individuals, foundations, families, and other entitles that distribute money] make good, informed, and ethical decisions. A philanthropy advisor can help determine what a funder’s goals and values are, whom they want involved in their decision or legacy, what style of giving is most consistent and meaningful, and what impact they want their giving to have, and for whom. Some advisors are “full service” – supporting every stage in the process including decision making and back office support; others are specialists in one or another area along the continuum such as strategy or family systems or evaluation or are specialists in a particular content area.

Very rarely do philanthropy advisors manage a client’s money.

Therefore, philanthropy advisors are rarely your competitors. On the contrary, they can be partners or collaborators who can help you do your job better. That collaboration can work so the services provided to a client can be seamless.

Most philanthropy advisors define a “client” as the entire family or the entire foundation. It is quite common that, to do their job, a philanthropy advisor may need to challenge the stated priorities and assumptions of the “founder”. It may not always be comfortable – for the founder or the other professionals, but it may be the optimal long-term way to go.

Experience has taught me to add a caveat to wealth advisors: philanthropy advisors are usually at the end of the financial food chain and rarely are they a source of investment business for wealth mangers. The reason for collaboration is not to get new business but to serve your clients’ full range of needs and interests more effectively.

5. What can wealth advisors learn about their investment approaches from the philanthropy world?

For well over a decade, the philanthropy/foundation world has been absorbed by the idea of “impact.” Why spend money, however well intentioned, if at the end of the day it doesn’t reduce poverty or illness or illiteracy or homelessness…? Results matter.

A derivative corollary to that is that there can and should be an alignment between how one spends one’s money and how one earns it. If one wishes to reduce illness or pollution, it is surely very dubious that investments in fossil fuels or tobacco make very much sense.

In the philanthropy sphere, this is not new. It has been discussed and finely honed for quite a while, and there are robust answers at every philanthropy, family office, and investment conference. There is now a maturity of the field, a growing range of credible options, and a conviction that impact and values-based investing need not be an outlier in any viable philanthropy investment strategy.

Here is the emerging news: What works for funders and foundations can work for individual investors as well. Many, especially but not restricted to younger funders, are beginning to ask about values-based funds or approaches beyond the philanthropy realm. Far too many money managers still think of these approaches as financial compromises or outside of mainstream investing. If a money manager resists, you may be sure that others are eager for the business. [In our own case, we made it clear to a money manager with whom we were working that that we were prepared to change because she tried to dissuade us from values-based investing. She studied up, learned a bunch of things that surprised her, and withdrew her objections.]

Those of us in the philanthropy sector have been at this for over a decade. Impact investment isn’t a panacea, and not every approach is a slam dunk, but alignment of values and investment should be a no brainer for every investor. And if you are a wealth advisor and need help understanding how this can work for your clients, I know a lot of folks in the philanthropy sector who would be happy to help.


A number of readers have asked for more specific recommendations how wealth advisors and philanthropy advisors can collaborate. Please contact us directly for a “how-to” list of several proven ways..

#301 Necessary But Insufficient: the Response of the Philanthropy World

February 20th, 2018

Richard Marker

In the almost 16 years since I have become self-employed, I have learned that there are both professional advantages and disadvantages. One of the double-edged swords is the ability to say or write whatever one wishes without clearing it with anyone. Of course, that doesn’t mean that there aren’t consequences to that freedom. For example, not everything I say in my public presentations or in my writings endears me to all of my fellow philanthropoids, and I am aware that such outspokenness has cost me some contracts. I sometimes say things that challenge common orthodoxies in the field. This post is another example of that.

Before my Jeremiad, let me be very clear: I am a big believer in the indispensability of voluntarism in giving of time, money, and leadership. This is true everywhere in the world and has been for as long as there have been structured societies. I also believe that it is advantageous [but not mandatory] that there be some incentives to do so, such as tax deductions, although this is far less universal. In a very high percentage of the nations and peoples of the world, education, healthcare, social welfare, and much more would simply not exist if it were not for that voluntarism, whether organized by faith based or secular institutions’.

Moreover, full disclosure, for a good part, but not all, of my career, I was a beneficiary of that voluntarism. I was employed by universities, non-profits, and foundations all of which exist because of voluntary giving. [I have also been employed by for-profit companies and am now mostly an independent contractor – a profit making venture most of the time.]

Having stated my bona fides, and affirming the necessity of our sector, what is my beef?

It is that our sector continues to advocate for the wrong things, or more correctly, inadequately advocates for what will truly make a difference.

The recent tax law, which I consider to be an embarrassment and an abomination for its shameless pandering to the super-wealthy and its concomitant disregard for those in need, has probable real implications for charitable giving. I say probable because it is by no means certain that the tax changes will in fact yield lower giving.

I agree with the pundits that it will probably depress giving by mid-level donors in the short run, but history doesn’t support that that depression will continue over time. In fact, if one looks at the implications of tax changes on charitable giving over the long run, one sees short term gains and short-term losses concomitant with tax changes, but that over time giving reverts to a mean and has remained there for a very long time. [There have been many pleas and attempts to increase that percentage, but with only marginal success.]

Moreover, most studies show that charitability is only marginally influenced by taxes, and when it is, it mostly has to do with how – not whether – one gives.

Having said that, it is true that this is a time when we need every incentive possible because of the vastness of the needs, and the tax sham certainly doesn’t do that.

But even were charitable giving to double, it would only make an incremental difference in the moral hole the USA has dug for itself in its recent policies. Maybe the tax scam will save the average person in the USA a few hundred dollars as they promise, but it comes at the same time when congress is radically reducing support for health care, education, food insecurity, and – if they have their way, social security and Medicare! The probable financial net loss to most people far exceeds the incremental tax savings.

And this is all accompanied by a reduction in consumer protection and in abetting climate degradation.

[If I wanted to get “political”, I would add to this shameful litany the incessant attacks on the judiciary, the press, science, and the truth, but let’s leave that discussion to another time.]

Not only do these changes portend economic hardships for many, but underneath, a veritable meanness of spirit, a culture of misanthropy, the very opposite of what our field is supposed to stand for.

To be fair, many in our field have been actively and assertively leading the good fight. But for too many institutions in the fields of philanthropy, the advocacy begins and ends with charitable deductibility and similar self-authenticating issues. Yes, it is worthy to encourage charitable giving, but hardly sufficient to redress these wrongs. As a field committed to improving our world, making it more sustainable and equitable for all, our voices should not be heard as defending our own needs, but rather demanding that what we stand for matters. These are public policy matters; they are a reflection of our tax priorities; they are statements about our national character, our ethics, and our values. Optics matter.

Most of us are in the field of philanthropy because of our visions for what our limited [even if generous] resources can help bring about. Let’s not let those visions be reduced to transactions on a tax return.

What then is the proper role of philanthropy in these times? There are numerous approaches.

a. Risk Capital: A recently widely disseminated piece out of the venerable Ford Foundation reaffirmed philanthropy’s role as society’s risk capital. Most of us in this field come to that same conclusion at an early point of our ventures in this field, and it is always worth re-discovering and re-affirming our uniqueness. After all, who besides our field is exempt from plebiscites, or is accountable to stakeholders beyond our own boards. We can, should, and must take risks that other sectors might legitimately shy away from. [That doesn’t exempt us from appropriate humility that our guesses or investments may be wrong, but when we are right, our investments can be transformative.]

In normal times, I would applaud this recent reaffirmation of our unique role, but these are not ordinary times. Our risks work best in times of stability and a common commitment to basic societal institutions. Our risks are more suspect if the education, social service, health care, and even cultural institutions are not adequately supported. Are we supporting risks to get us back to an authentic baseline – or avoiding our responsibility?

b. Funding what government won’t. Some segments of our sector celebrate examples where voluntarism of money and time have successfully replaced programs that taxpayer supported institutions no longer can afford. Those successes or noble experiments most typically are present in the education sphere, but not restricted to them.

However, leaving aside the moral challenge of having human needs dependent on the good will of voluntarism, or whether this reflects public policies that are sustainable over time, on a practical level it is simply impossible to privatize all of the basic needs of an industrialized, or post-industrial society. The scale, the alignment of need with available resources, and the accountability to the public make it all but impossible.

c. Continuing to support what we always have This approach has served society well in the past. The need for cultural or local institutions will always be there even after a particular disaster or financial crisis passes. Many argue that those continuing investments save many millions of dollars over time and give a much-needed social stability especially in times of turmoil.

The logic of such support is unassailable, but today there are radical changes in the funding landscape. When Ultra High Net Worth funders can give 9 and 10 figure gifts to museums and orchestras and universities, what real difference does the average person’s – even the average wealthy person’s – annual gift make? At this time when our disruption is not primarily financial but ethical and existential, does keeping to the well-trodden best express our best philanthropic interests?

d. Becoming real change agents. Over the years, I would often challenge funders [clients and students] when they would say that they want their funding to “make a difference.” I point out that “making a difference” means that something is different than it would be without your funding, and that often means taking chances. [see a. above]. Some would acknowledge that they mean something much more modest than being a change agent, rather that they want to focus on institutions that will be sustained or enhanced by their gift. Others took the message to heart and thought long and hard about what difference they really did want to make and if they were prepared to be disrupters.

At this time in history, the disruptions are being caused by public policy challenges that go deep and wide. To be change agents requires going beyond an “industry” or “priority interest” in our funding. To be change agents even requires going beyond our own sector. It means leveraging our resources, all of our resources – financial, influential, and knowledge – to address potential cataclysmic disruptions. [In the case of the environment, these are clearly not exaggerations; in the case of the character of our nation, they are also existential.]

I think you can gather where I stand. That doesn’t’ mean that funders who choose a, b, or c. are bad funders, but they should be conscious of where those decisions sit in the context of current needs. For those who share my alarm at the fragile state of our union and planet, it is hard to shy away from a commitment to d.

Advocacy matters more than ever before. As funders, let’s make sure we are advocating for that which can indeed make the difference.

#300 – Equity: Context Matters

February 13th, 2018

Richard Marker

This past week encapsulated many elements of my professional and volunteer life at present. I met with clients and potential clients; I attended philanthropy association events and related public lectures; I participated in international interreligious meetings and met many involved in those endeavors in our new hometown of Washington, DC The client part is beyond the scope of this particular post, but what emerged from the rest raised some challenging dilemmas for those of us committed to a more equitable world. To wit:

A profoundly moving and engaging 2-day meeting of the Alliance for Virtue occupied much of Tuesday and Wednesday. I was invited as a past chair of two international interreligious organizations, and a quondam continuing participant in this realm. This particular gathering was primarily, but not exclusively, for those of the 3 Abrahamic traditions. Leadership, though, was heavily from the Islamic world and given the abysmal mischaracterization of Muslim leadership heard in the USA, this meeting was a profound and resounding rebuttal.

Let us be clear: even as treacherous as the USA has become, and it has, the risk that most of us in this country take in supporting diversity, pluralism, and mutual acceptance is minimal. We may get trolled sometimes, although most of us aren’t famous enough for the trolls to bother. A few put their jobs in jeopardy by being outspoken, but even though I have personally lost at least 2 contracts because of public statements, they neither defined me nor radically altered my income. I am not diminishing that some in the USA do face death threats and challenges to the comfort of their daily lives, but all of these pale in comparison to the jeopardy that those in the Near and Middle East can face daily. It is humbling indeed to hear strong voices on behalf of mutual acceptance from those who will return home to genuinely existential challenges.

Another session last week that forced some introspection was a public “debate” program sponsored by the Century Foundation and organized in DC by the Wagner School. The topic was the indispensability of integration as a precondition for successful educational institutions. I, like the vast majority of those present, began with a facile assumption – that of course integration is far preferable and likely to yield the long term optimal success for the largest number of students, including those most at risk. However, the spokesperson for the “no” side was far more persuasive. His argument was that most schools are racially and economically homogenous and to wait for that to change is both politically Pollyanna-ish and does a disservice to current students. Educational [and other support systems] need to provide tools for success wherever they are. Since educational experience can never be divorced from larger socio-economic realities, until or unless the system can address all of that, school integration becomes nothing more than tokenism – from which students return to their more organic and homogenous lives. [He did not argue that elimination of segregation or affirmative action are not valid and worthy goals, only that they can get in the way if they are perceived to be preconditions to achievement.]

In other words, achieving equity in the educational sphere remains a complex example of interconnected factors [forgive me if I don’t use the word “intersectionality”]. Funders whose goal is equity in the educational sphere need think twice about what will work and what will count. Ideologues – across the political divide, beware!

The final piece was an inspirational presentation at WRAG’s annual Cafritz lecture. Given by Rukaiyah Adams, an African American Woman Foundation CIO [all of which were relevant in the context of her remarks], she challenged funders to think more holistically about the relationship of their investments to their grantmaking [remarkably, still an approach that some people find challenging]. Her finance and personal background gave her a distinctive point of view – one that should persuade all but the most resistant wealth mangers.

Less typical of such presentations, especially by finance types, though, was her insistence that funders need to work with their grantees – and even in their own staffing practices – to make sure that equity is not just a macro funding goal, but one made manifest in actual practice. Equity funding, she posited, only really matters when it actually results in more just distribution of resources and honors people at every stage of organizational life. [Followers of my philanthro-ethics posts over the last few years won’t be surprised that her strong advocacy resonated with me and reflected much of my own point of view.]

For me, what emerged from last week was a renewed commitment to the mandate to work for, advocate for, fight for, and fund equity that is real. It isn’t a bad reminder for all of us in the philanthropy and social justice realms everywhere.

#299 Binge Reading Takeaways; 8 Philanthropy Trends of Note

February 7th, 2018

Richard Marker

Sometimes it happens – my backlog reading pile simply gets out of hand. That isn’t good, so with the new year, I am well along in a binge reading marathon. Lots more to go, but far enough into it that some clear trends are emerging. None of these trends will catch any of my philanthropy colleagues by surprise, but it is very striking to see them writ large, and often. Here they go:

1. Is Philanthropy synonymous with Charity?

While charity is a form of philanthropy, they are not synonyms. Too many think they are, that working in the nonprofit world is a kind of vow of poverty, and it leads to real dilemmas. For example, for some, there is still an assumption that nonprofit organizations that serve human service needs should, by definition, be undercapitalized, and that employees who choose to work there should consider that underpayment should be an implicit part of the deal. While there are very important attempts in our field to redress this unproductive, and ultimately unconscionable, practice and approach, in reading material from around the world and even in the USA, it is clear that we have a long way to go to fully respect and fund this sector, and to treat the trained professionals who provide for those in need with the dignity and compensation they deserve.

Comment: As many readers and those who have heard me speak about philanthro-ethics know, it is my belief that this only changes when we funders take the lead in treating our grantees appropriately. Which leads to the next visible trend:

2. How can we Improve, enhance, and dignify the funder-grantee balance?

For a long time, funders have referred to grantees as “partners”; let’s face it, only a few behaved that way. The challenge is obvious and well known: funders have money and must choose recipients. More recipients want/need that money than will receive it. It is a built-in power imbalance with all sorts of implications. In reading the literature in bulk one is struck by how many affinity groups and organizations are addressing this question and have recommended standards, approaches, models, and examples to show that they are taking it seriously. Implicit in this trend is that funders recognize that we cannot do our job unless we have real, honest, and contemporaneous information. Because of the power imbalance, only we can make that happen and to do so, we have to make those interdependent relationships truly viable.

Comment: is this a trend only at the affinity group level and among a few field leaders, or has this changed attitude becoming the new normal? In my experience teaching “philanthro-ethics”, most funders want to do the right thing, but it requires a very different sense of self to change our behavior, and to build full openness with grantees.

3. What is the proper Role of Philanthropy?

Many in our field have been traumatized by political developments in the USA and elsewhere in the world. Many foundations in the USA that have shied away from even the most legally acceptable advocacy over the years find themselves rethinking that stance. As the safe space for philanthropy closes or is under attack elsewhere in the world, funders are asking if our proper role is to restrict ourselves to safe spaces or align with the change agents. As governments, especially but not only in the USA, move to restrict public support for social services, humanitarian support for those who seek and deserve asylum, limit protections for individuals in the business and political spheres, should the role of philanthropy be to explicitly replace public support or continue to maintain the well deserving educational and cultural institutions that were a mainstay for many years?

Comment: Philanthropy is and always has been in a dialectic with public policy. Not every funder has done so consciously or with full sensitivity to the implications of his/her/our giving, but we have always made decisions about our voluntary support with some awareness of what is or is not publicly supported. However, rarely, if ever, has this dialectic been so intentional.

4. Must Philanthropy be Non-Profit?

This is an interesting one, to be sure. The “doing well by doing good mantra” has infused business school students for the last 2 decades. For some it reflects genuine altruism and belief that the ability to raise capital for scaling of good problem-solving issues is greatly enhanced by the profit motive. That point of view ascribes to the [hoped for] probability that a profit motive has greater promise of sustainability than continually depending on fundraising from individuals and governments.

This has led to a number of important developments: the B-Corp, the LLC, “impact investments”, and more.

Comment: Some of these strategies are well along in working out the kinks, others are still at the “faith” level, waiting for consistent evidence that one can indeed solve all/most social ills using for-profit means. And in many cases, when there is a tension between the for-profit and social good, the for-profit wins out. We are beginning to see evidence that, as welcome as this development is, it is not a guaranteed panacea and it appears that, to address real human need, there will always be an important role for not-for-profit entities.
Comment: Not to put too fine a point on it, but philanthropy [as opposed to charity – see above] has never only been about non-profit entities. Corporations sponsorships may be tax deductible in the US, but the motives are hardly purely not-for-profit; community development banks and their centuries old predecessors such as free loan societies exist for public good no matter their legal structures. Tax systems in social welfare nations incorporate a responsibility to citizens that ideally obviates the need for the kind of voluntary support for education, human services, and health care we see in the USA. They may not call it philanthropy, but citizens make a choice at their ballot boxes how they want to be taxed and spend how that money is to be spent.

5. Is “intersectionality” the Solution?

As I have written in more depth elsewhere, there are two meanings to “intersectionality.” One is a political imperative: if one doesn’t honor the full range of issues, one is in effect denying them all. This approach is filled with red-lines. While it addresses the truth that there is an interconnectedness to most systemic questions, it explicitly posits that a funder [or anyone, for that matter], needs buy into every means test if one can claim to be a fellow traveler.

There is a less loaded definition of the term. It acknowledges the interconnectedness mentioned above, recognizing that no systemic issue can be owned by, or solved by, any single sector. The for-profit world has its strengths and limits, the nonprofit sector does as well, and so does the public/government sector. This meaning of the term also mandates a totality of approach, of practice but not of ideology. By synergizing [sorry for the old jargon] what is best about each, it is possible to look beyond traditional limitations of each.

Comment: In my binge reading, examples of partnerships of the commitment to transcending sector limitations abound on the local, national, and international level. In fact, given these developments, I am in the midst of updating my very frequently requested practicum on funder collaborations to more adequately reflect this welcome, if challenging trend.]

6. Can Systemic Solutions solve what Compassion hasn’t?

The traditional sequence of philanthropic involvement starts with compassion. One sees a homeless person, one has an ill family member, one sees the implications of illiteracy in the workplace. Compassion is the single greatest motivator to “do something.”

It doesn’t take long to realize that it is a painfully inefficient way to be caring. Those individuals still need support, but there must be a more strategic way to distribute food, provide comfort, teach people. Most of 20th Century philanthropy was committed to conceiving more and better sophisticated strategies to deliver those services, and how to choose among them.

In recent years, though, many have become aware that it is insufficient to simply choose among the best-known interventions; one needs to go deeper into the underlying causes, the systemic roots of inequity and all of its implications. To preempt problems rather than remediate them or provide palliatives to them is far more attractive, especially to those who consider themselves disruptors in the business world.

At some point, though, they too discover that there is no such thing as systemic solutions unless those solutions are implemented in real time – on the ground. So, if the traditional progression is “compassion” to “strategic” to “systemic”, we are seeing that it works in reverse for many disruptors.

Comment: in the end, we need interventions everywhere along the spectrum, regardless of where one starts, or why one starts there. And different funders may, legitimately, choose to intervene at any of the stages.

7. Whatever happened to Social Impact Bonds/Pay for Success?

For a few years, every problem had a pay for success solution. After all, if one can solve societal problems and save tax dollars and make money in the process, it would satisfy so many needs at the same time. In its heyday, there was no problem too large for those who ascribed to this model.

What was so striking in this binge reading is how rarely this model has been mentioned. What happened? It is clear that consensus on what measures of success were never that easy. Sure, one can count how many fewer prison cells are needed, but that was the easiest one. And even there, no one anticipated to lobbying efforts of the private prison industry that had everything at stake in the failure of the model.

And when one looks at other places for intervention, the longitudinal studies necessary to test out various models challenge the patience of funders and the will of politicians. The idealization of the model quickly confronted the reality of trying to coordinate sectors with competing bottom-lines, decision making, stakeholders and time lines.

Comment: Several years ago, at the beginning of the SIB craze, I was asked by a prominent international bank to speak at their London office to help make sense of a client’s proposal to clean up the Ganges using SIB’s. Their client began his comments saying that Governments are all corrupt; non-profits are incompetent; religious leaders are naïve; only the private sector has the necessary capital and knowledge to accomplish the job. The proposal could never get off the ground. Why? The Ganges travels through many political areas, it is used by the private sector, but also for religious rites, and millions of individuals for all sorts of reasons of bathing, laundry, garbage, and more. The idea that all of that can be ignored to solve such a complex challenge was both naïve and counterproductive. It illustrated the very complexity of using pay for success models. [I suspect that they found it easier to have me be the reality-screen than to have to challenge their own client. This bank had to know that it was a flawed concept.]

I still believe that Pay for Success models can work in some settings, but they require a political will and willingness to wait quite a while for payout for them to work.

8. What are the words of the year?

There are 2 – one is a repeat performer, the other newly on the list: Impact and Equity. In a sense they are both talking about the same thing: what happens as a result of one’s giving or intervention? Underlying the two words is the conviction that if one is going to give voluntarily, it should make a difference. And that means that something different in fact happens. If one is committed to reducing illiteracy, how many books are distributed matters much less than how many more people can actually read. If one is committed to reducing recidivism, it matters which interventions work. And so forth. Thus “impact.”

Given the erosion of civil society alluded to above, “equity” has become the “impact” that matters. Whether it be racism, misogyny, nativism, or any of the other ways that lead to systemic unfairness, many funders now say that there must be a hierarchy of claims on their investments. Years of well-intentioned funding have simply not redressed these lacunae in the public weal, and recent events in the USA and elsewhere have exposed these gaps writ large. Only by keeping the “equity” value as the only legitimate long-term goal can funders accomplish what the promise of voluntary giving implies.

Comment: Guaranteed that this is not the last year that these words will be on this list.

My binge reading is continuing. I’ll keep everyone in the loop if the list gets longer.